New Partnership Aims To Lift Women Microentrepreneurs In Myanmar Out Of Poverty

A partnership between DAWN, a microfinance agency, and the U.S.' Overseas Private Investment Corporation aims to provide financing to low-income women entrepreneurs in Myanmar. (Photo credit: Soe Than WIN/AFP/GettyImages)

From the United Nations to EY, experts have touted the power of microfinance in extending financial inclusion to women in developing countries. A new partnership between the U.S.’ Overseas Private Investment Corporation (OPIC) and Early Dawn Microfinance (DAWN) aims to bring that access to low-income women entrepreneurs in Myanmar.

OPIC and DAWN announced in early May that the former had agreed to provide a $5 million loan to support DAWN’s activities in the country. An outgrowth of Save the Children’s Myanmar operation, DAWN has been operating independently of the NGO for the past two years, with strong support from Accion and other stakeholders. When DAWN launched in 2015, it had 27,000 clients carried over from Save the Children. Two years later, it serves 80,000 women and has its eye on rapid expansion.

“It has been a very interesting and successful two years,” said DAWN CEO Gonzalo Gonzalez. He credits Accion (which is DAWN's largest shareholder and where Gonzalez has served as a vice president) with helping drive the organization’s growth by providing digitization support, employee training, product improvement consultation and assistance in other key business areas.

DAWN currently employs nearly 200 loan officers across its 24 branches (up from 11 branches in 2015). Following on Save the Children’s mission to support women and children, DAWN specifically targets low-income women who are microentrepreneurs. When seeking new branch locations, Gonzalez said the organization looks for areas that lack access to formal financial institutions, as they are most in need of microfinance products.

According to the World Bank, only 21 percent of adults in Myanmar had formal bank accounts in 2014. Without a traditional bank account, it’s very difficult for people save, manage financial risks or secure financing. “These are people who are the most marginalized in the economy,” said Loren Rodwin, OPIC's managing director of micro and SME finance. “We think OPIC can play a role here, with our private sector partner, to boost sustainable growth and boost the bottom of the economic pyramid.”

“There is huge potential because people [in remote areas] only have access to money lenders with high interest rates,” Gonzalez said. Consumers who are unable to participate in the traditional banking system are eager for more affordable alternatives. “If you open a branch in those areas, immediately you have 2,000-3,000 clients,” he said.

At present, DAWN makes group loans to clusters of borrowers but intends to offer individual loans in the future, and plans to increase its products to address the needs of men as well. Most of DAWN’s current borrowers run small trading businesses, according to Gonzalez, though some sell handicrafts and wood crafts, run bicycle taxi operations or own beauty salons. Gonzalez said that receiving the loans is often transformative, not just in terms of women’s income but their psyches as well. “It’s very interesting to see the effects in their confidence. They realize they can be leaders,” he said.

When women microentrepreneurs achieve sustained financial success in their businesses, their families benefit, too. A steady income means parents can afford to send their children to school, and those children will grow up with greater access to job and entrepreneurship opportunities. “Access to financial services is the nexus of all the ways in which people are impoverished,” Rodwin said. He illustrated his point with a theoretical example of a low-income family that subsists on dairy farming. If one of the parents became ill or injured, the family would likely use any savings they had to cover the medical bills. They might even have to sell their cows, their only income-earning assets, to pay the expenses. At that point, they’re left in an extremely dire situation. But if they were able to access credit, they might have been able to keep their income-earning assets and manage the crisis without falling into extreme circumstances.

By helping low-income women grow their businesses, DAWN aims to solve a piece of that puzzle, giving families the means to create financial stability for themselves. The $5 million from OPIC will enable DAWN to create at least 60-75,000 loans, according to Rodwin.

Gonzalez said DAWN will also be looking for opportunities to incorporate new technologies into their branches and their service delivery options. “We see tech an important tool to improve the services for our clients in the near future,” he said. As telco infrastructures continue to progress in Myanmar, DAWN will likely launch a pilot program for mobile payments, among other advancements.